A Ring-Side View: The Mortgage Bribery Arrests

LIC Housing Finance Ltd, a company promoted by LIC of India, is one of the companies implicated in the alleged scam, but the firm maintains it has always followed regulations.

It was a humid Wednesday evening at the Mumbai office of India’s premier crime investigation unit, the Central Bureau of Investigation. At least 80 journalists armed with cellphones, cameras, tripods and booms were piled upon each other, outside a door, elbowing and jostling with a frenzy generally only seen among soccer hooligans or wrestling fans.

The excitement was infectious as news of a loan scam possibly in the billions of rupees began trickling out.

After pushing and pleading the press folks to fall back yielded no results, inspectors asked print reporters to enter the top boss’s room for a briefing, unwittingly setting off a stampede of sorts as the entire crowd pushed through. The anarchy continued for another 10 minutes as journalists took over chairs, tables and any other strategic locations.

No sooner had the briefing begun when the journalists began interrupting it with frantic calls to their offices so they could be the first to rattle off the names of the bankers and other executives involved in what appeared to be an alleged conspiracy that involved a financial intermediary paying bribes to officials at top state-run banks so that major real estate companies could corner large corporate loans. It was prime-time news and made banner headlines Thursday.

The frenzy peaked when, like predators, the media pounced on the first few copies of the CBI’s official statement. This reporter led the pack and got his hands on the first copy, only to see it ripped away and end up a crumpled ball. When the CBI officers said that the executives being arrested were shortly to be produced in a local court so the agency could seek two weeks custody of them, the journalists rushed off there.

At the CBI court, the crowd comprised of family members of the accused, a battery of lawyers and a fidgety group of journalists rushing in and out of the court room as the proceedings progressed.

The eight men arrested each had their own lawyer. Among the suspects was R.R. Nair, chief executive of the venerable state-run mortgage lender LIC Housing Finance Ltd. The firm, in a statement, has said it has always followed all regulations in disbursing loans. Mr. Nair, a regular face on television, appeared crest-fallen and didn’t look up at the many reporters to whom he had given interviews.

Arguments and counter-arguments were made. The CBI told the court it had seized 28 computer hard drives, 189 gold coins, gift vouchers worth nearly 500,000 rupees ($11,000) and 1.2 million rupees in cash from one of the premises of financial services firm Money Matters Group, which saw three of its executives arrested yesterday. The CBI has said the men were involved in paying bribes to state-run firms, an accusation that lawyers for the Money Matters’ executives denied.

Two of the men complained of heart ailments. One spoke of a prostate problem. The courts asked whether the men had been mistreated by agency officials. All answered in the negative.

One of the lawyers with CBI whispered under his breath to no one in particular: “There are some good CBI officials also.”

The men asked for judicial custody, which means their interrogation could take place only during the court working hours and only by the permission of the court – not the case with police or CBI custody. But the court allowed the investigating agency to detain the arrested men until Nov. 29. A suppressed “damn” emerged from the lips of a family member of one the men as the court announced its decision.

By that time all the court rooms were deserted but the one where the eight men were awaiting their last brush with the media. The CBI rushed them to waiting vans, as the men unsuccessfully tried to hide their faces from camera glare. A couple of police constables followed behind, pushing away the cameramen to let the vans disappear into the dark of the night.

Based on their interrogation, investigators may decide to bring charges against the men before a court of law, which is when the detained men can plead guilty or not guilty and ask for bail. Or they may ask for an extension of the period of custody. Charges have to be brought against them court within 90 days unless a special extension is sought.

But here’s the surprising thing after last night’s media circus. This the documents allowing the CBI to take custody of the men put their take at just 12.4 million rupees or $270,000. We still don’t know the magnitude of loan disbursements connected to the alleged swindle.

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